The 2023 Strategy re-emphasises the government’s commitment to the sustainability disclosure requirements (SDR) set out in its Greening Finance Roadmap, published in October 2021, including its support for UK adoption of the standards being finalised by the International Sustainability Standards Board (ISSB) and the development of an endorsement mechanism. The SDR aims to create a streamlined disclosure framework bringing together new and existing sustainability reporting disclosure requirements for UK businesses, the financial sector and investment products.
The UK has already taken a number of steps in developing the SDR, including the Financial Conduct Authority (FCA)’s Listing Rule for premium and standard listed companies to make disclosures consistent with the Task Force on Climate-related Financial Disclosure (TCFD) Recommendations, and government legislation to require certain AIM-listed and unlisted companies and LLPs to include climate-related financial disclosures in the annual report. TCFD reporting requirements have also been introduced for asset managers, life insurers, FCA-regulated pension providers and occupational pension schemes.
The government aims to introduce the SDR in a way that complements the UK’s wider non-financial reporting framework, minimises duplication with other forms of corporate reporting and gives businesses enough time to implement the new requirements. To this end, the 2023 Strategy confirms that the government will be carrying out a broader review of the UK’s non-financial reporting framework, beginning with a call for evidence requesting stakeholder views on how best to achieve these aims.
The 2023 Strategy sets out plans to implement four key components of the SDR:
- Disclosure of transition plans.
- IFRS Sustainability Disclosure Standards developed by the ISSB.
- Company reporting of GHG emissions, nature-related financial risks and impacts, and physical climate risks.
- Fund labels and the FCA’s approach to the SDR.
The 2023 Strategy also sets out plans to develop and consult on a UK Green Taxonomy to promote transparency and help to direct investment towards sustainable businesses.
The 2023 Strategy can be found on the government website here. Our related Need to know publication is available here.